Chapter Thirteen
Progress and Performance Measurement and Evaluation
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Where We Are Now
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Project Management 6e.
Learning Objectives
Identify the four steps for controlling a project
Utilize a tracking Gantt to monitor time performance
Understand and appreciate the significance of earned value
Calculate and interpret cost and schedule variance
Calculate and interpret performance and percent indexes
Forecast final project cost
Identify and manage scope creep
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Chapter Outline
13.1Structure of a Project Monitoring Information
System
13.2The Project Control Process
13.3Monitoring Time Performance
13.4Development of an Earned Value
Cost/Schedule System
13.5Developing a Status Report: A Hypothetical
Example
13.6Indexes to Monitor Progress
13.7Forecasting Final Project Cost
13.8Other Control Issues
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Structure of a Project Monitoring Information System
Creating a project monitoring system involves determining:
What data to collect
How, when, and who will collect the data
How to analyze the data
How to report current progress to management
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Project Management 6e.
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Project Monitoring Information System
Information System Structure
What Data Are Collected?
Current status of project (schedule and cost)
Remaining cost to compete project
Date that project will be complete
Potential problems to be addressed now
Cost and/or schedule overruns and the reasons for them
Forecast of overruns at time of project completion
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Project Management 6e.
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Project Monitoring Info. System (cont’d)
Information System Structure (cont’d)
Collecting Data and Analysis
Who will collect project data?
How will data be collected?
When will the data be collected?
Who will compile and analyze the data?
Reports and Reporting
Who will receive the reports?
How will the reports be transmitted?
When will the reports be distributed?
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Project Management 6e.
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Project Progress Report Format
Progress since last report
Current status of project
Schedule
Cost
Scope
Cumulative trends
Problems and issues since last report
Actions and resolution of earlier problems
New variances and problems identified
Corrective action planned
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Project Management 6e.
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The Project Control Process
Control
The process of comparing actual performance against plan to identify deviations, evaluate courses of action, and take appropriate corrective action
Project Control Steps
Setting a baseline plan
Measuring progress and performance
Comparing plan against actual
Taking action
Tools for Monitoring Time Performance
Tracking Gantt chart
Control chart
Milestone schedules
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Baseline and Tracking Gantt Charts
FIGURE 13.1
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Project Management 6e.
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Project Schedule Control Chart
FIGURE 13.2
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Project Management 6e.
Development of an Earned Value Cost/Schedule System
Time-Phase Baseline Plan
Corrects the failure of most monitoring systems to connect a project’s actual performance to its schedule and forecast budget.
Systems that measure only cost variances do not identify resource and project cost problems associated with falling behind or progressing ahead of schedule.
Earned Value Cost/Schedule System
An integrated project management system based on the earned value concept that uses a time-phased budget baseline to compare actual and planned schedule and costs
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Project Management 6e.
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Glossary of Terms
TABLE 13.1
| EV | Earned value for a task is simply the percent complete times its original budget. Stated differently, EV is the percent of the original budget that has been earned by actual work completed. [BCWP—budgeted cost of the work performed]. |
| PV | The planned time-phased baseline of the value of the work scheduled. An approved cost estimate of the resources scheduled in a time-phased cumulative baseline [BCWS—budgeted cost of the work scheduled]. |
| AC | Actual cost of the work completed. The sum of the costs incurred in accomplishing work. [ACWP—actual cost of the work performed]. |
| CV | Cost variance is the difference between the earned value and the actual costs for the work completed to date where CV = EV – AC. |
| SV | Schedule variance is the difference between the earned value and the baseline line to date where SV = EV – PV. |
| BAC | Budgeted cost at completion. Total budgeted cost of the baseline or project cost accounts. |
| EAC | Estimated cost at completion. |
| ETC | Estimated cost to complete remaining work. |
| VAC | Cost variance at completion. VAC indicates expected actual over- or under-run cost at completion. |
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Project Management 6e.
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Developing an Integrated Cost/Schedule System
Define the work using a WBS.
Scope
Work packages
Deliverables
Organization units
Resources
Budgets
Develop work and resource schedules.
Schedule resources to activities
Time-phase work packages into a network
Develop a time-phased budget using work packages included in an activity. Accumulate budgets (PV).
At the work package level, collect the actual costs for the work performed (AC). Multiply percent complete times original budget (EV).`
Compute the schedule variance (EV-PV) and the cost variance (EV-AC).
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Project Management Information System Overview
FIGURE 13.3
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Project Management 6e.
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Development of Project Baselines (cont’d)
Rules for Placing Costs in Baselines
Costs are placed exactly as they are expected to be “earned” in order to track them to their point of origin.
Percent Complete Rule
Costs are periodically assigned to a baseline as units of work are completed over the duration of a work package.
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Development of Project Baselines (cont’d)
Purposes of a Baseline (PV)
An anchor point for measuring performance
A planned cost and expected schedule against which actual cost and schedule are measured
A basis for cash flows and awarding progress payments
A summation of time-phased budgets (cost accounts as summed work packages) along a project timeline
What Costs Are Included in Baselines?
Project direct overhead costs: labor, equipment, materials
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Project Management 6e.
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Methods of Variance Analysis
Comparing Earned Value with:
The expected schedule value
The actual costs
Assessing Status of a Project
Required three data elements
Planned cost of the work scheduled (PV)
Budgeted cost of the work completed (EV)
Actual cost of the work completed (AC)
Calculate schedule and cost variances
A positive variance indicates a desirable condition, while a negative variance suggests problems or changes that have taken place.
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Methods of Variance Analysis
Cost Variance (CV)
Indicates if the work accomplished costs more or less than was planned at any point in the project.
Schedule Variance (SV)
Presents an overall assessment in dollar terms of the progress of all work packages in the project scheduled to date.
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Project Management 6e.
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Cost/Schedule Graph
FIGURE 13.4
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Earned-Value Review Exercise
FIGURE 13.5
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Developing A Status Report:A Hypothetical Example
Assumptions
Each cost account has only one work package, and each cost account will be represented as an activity on the network.
The project network early start times will serve as the basis for assigning the baseline values.
From the moment work an activity begins, some actual costs will be incurred each period until the activity is completed.
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Project Management 6e.
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Work Breakdown Structure with Cost Accounts
FIGURE 13.6
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Project Management 6e.
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Digital Camera Prototype Project Baseline Gantt Chart
FIGURE 13.7
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Project Management 6e.
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Digital Camera Prototype Project Baseline Budget ($000)
FIGURE 13.8
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Project Management 6e.
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Digital Camera Prototype Status Reports: Periods 1–3
TABLE 13.2
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Project Management 6e.
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Digital Camera Prototype Status Reports: Periods 4 & 5
TABLE 13.2 (cont’d)
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Project Management 6e.
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Digital Camera Prototype Status Reports: Periods 6 & 7
TABLE 13.2 (cont’d)
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Project Management 6e.
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Digital Camera Prototype Summary Graph ($000)
FIGURE 13.9
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Project Management 6e.
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Digital Camera Project-Tracking Gantt Chart Showing Status—Through Period 7
FIGURE 13.10
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Project Management 6e.
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Project Rollup End Period 7 ($000)
FIGURE 13.11
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Project Management 6e.
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Indexes to Monitor Progress
Performance Indexes
Cost Performance Index (CPI) = EV/AC
Measures the cost efficiency of work accomplished to date.
Scheduling Performance Index (SPI) = EV/PV
Measures scheduling efficiency to date.
Percent Complete Indexes
Indicate how much of the work accomplished represents of the total budgeted (BAC) and actual (AC) dollars to date.
Percent Complete Index Budgeted Costs (PCIB) = EV/BAC
Percent Complete Index Actual Costs (PCIC) = AC/EAC
Management Reserve Index (MRI) = CV/MR
Reflects the amount of Management Reserve (MR) that has been absorbed by cost over-runs.
Is popular in the construction industry.
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Interpretation of Indexes
TABLE 13.3
| Index | Cost (CPI) | Schedule (SPI) |
| >1.00 | Under cost | Ahead of schedule |
| =1.00 | On cost | On schedule |
| <1.00 | Over cost | Behind schedule |
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Indexes Periods 1–7
FIGURE 13.12
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Additional Earned Value Rules
Rules applied to short-duration activities and/or small-cost activities
0/100 percent rule
Assumes 100% of budget credit is earned at once and only when the work is completed.
50/50 rule
Allows for 50% of the value of the work package budget to be earned when it is started and 50% to be earned when the package is completed.
Ruled used gates before the total budgeted value of an activity can be claimed
Percent complete with weighted monitoring gates
Uses subjective estimated percent complete in combination with hard, tangible monitoring points.
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Forecasting Final Project Cost
Methods used to revise estimates of future project costs:
Revised estimated cost at completion (EACre)
Allows experts in the field to change original baseline durations and costs because new information tells them the original estimates are not accurate.
Forecasting cost at completion (EACf)
Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable.
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Forecasting Models: EACre and EACf
The equation for
The equation for
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Project Management 6e.
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Forecasting Final Project Cost (cont’d)
Method supplemented to the estimate at completion (EACf) computation:
To Complete Performance Index (TCPI)
Measures the amount of value each remaining dollar in the budget must earn to stay within the budget.
A ratio less than 1.00 indicates an ability to complete the project without using all of the remaining budget.
The equation for
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Monthly Status Report
EXHIBIT 13.1
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Trojan Nuclear Plant Decommissioning Earned Value Status Report
EXHIBIT 13.2
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Other Control Issues
Issues In Maintaining Control of Projects
Scope Creep
Baseline Changes
Technical Performance Measurement
Data Acquisition Costs and Problems
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Scope Changes to a Baseline
FIGURE 13.13
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Project Management 6e.
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Conference Center WiFi ProjectCommunication Plan
FIGURE 13.14
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Project Management 6e.
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Key Terms
Baseline budget
Budget at completion (BAC)
Control chart
Cost performance index (CPI)
Cost variance (CV)
Earned value (EV)
Estimated Cost at Completion—Forecasted (EACf)
Estimated Cost at Completion—Revised Estimates (EACre)
Percent complete index—budget costs (PCIB)
Percent complete index—actual costs (PCIC)
Schedule performance index (SPI)
Schedule variance (SV)
Scope creep
To complete performance index (TCPI)
Tracking Gantt chart
Variance at completion (VAC)
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Project Management 6e.
